Analysing the Critical Role of Appointed Date in Scheme of Arrangements

The new Companies Act, 2013 marked a significant departure, replacing the time-honoured Companies Act,1956. There were certain modifications, abolitions that introduced new concepts. While much of the Act superseded its predecessor, however there were some new adaptations made with respect to few elements. Among these element, was the concept and idea of ‘Appointed and Effective date’ of the transfer/merger/demerger/amalgamation of the group entities, which continue to hold relevance with nuanced elucidations reflecting the evolving legal framework.


Chapter XV of the Companies act,2013 incorporates scheme for the reconstruction of a company involving mergers and amalgamation, which includes two significant dates: ‘Appointed date’ and ‘Effective Date’. ‘Appointed date’  has nowhere been defined in the provisions of Companies act,2013. It is just by the interpretation and understanding from various schemes that it can be determined as a date decided by the company for the transfer of its business/ undertaking or the date that has been mentioned in the High Court’s order. In the terms of a layman, it can be defined as a date when one company (‘transferor’) transfers all its assets and liabilities to another company (‘transferee’). On the other hand, ‘Effective date’ can be described as the date when High Court’s order is filed with the Registrar of Company (‘ROC’). It indicates that the scheme will now become effective. It is the date on which the scheme is sanctioned by National Company Law Tribunal (NCLT). Section 232(6) of the companies Act makes it necessary for the company to state an appointed date in the scheme proposed. However, there is no such requisite provision for indicating ‘Effective date’. This results in many judicial discussions and debates on this matter. Before applying for the amalgamation/ transfer to the court, it should be ensured that the scheme must contain a date of amalgamation/transfer as per Section 391(1) of the act. During the continuation of the proceedings, both the companies (transferor and transferee) may carry their business activities. The proceeding of court may take time due to the steps and rules that are required to be followed under Section 391 to 394 A of the act.

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Companies Act

Hon’ble Supreme Court in the case, Marshall Sons & Co.(India) Ltd. Vs Income Tax Officer [1]upheld that every scheme of transfer/amalgamation must clearly state a date from which transfer/amalgamation is taken into effect. Nevertheless this date can be modified and a new date can be suggested by the court on its discretion based on the facts and circumstances of the case, while sanctioning of the scheme. If the court does not determine a date, then the date mentioned in the sanctioned scheme should be considered as the ‘transfer date’. In this case the scheme provided the date 1st January,1982 and the scheme was merely sanctioned by the court, without determining the date of amalgamation/transfer. It would not be appropriate to say that the scheme of transfer/amalgamation would become effective from the date of order by court, sanctioning the scheme. Hence, it was held even if the allotment of shares, filing of court order before Registrar of Company for registration, order of court sanctioning the scheme of transfer/amalgamation may have been done subsequent to January 1, 1982, still the date of amalgamation would be 1st January,1982 as stipulated in the scheme.

The same was held in the case Raghubar Dayal v. The Bank of Upper India Ltd.[2] The decision of Supreme Court was not supported by the Ministry of Corporate Affairs (MCA). The MCA was of the opinion that the scheme of transfer/amalgamation should become effective only after the order of High Court has been duly signed and registered with the registrar of companies.

In the case of Deputy Commissioner Of Income Tax vs Aimil Limited[3], the scheme was approved by the court on 18th March 1996 with retrospective effect from the date April 1,1995 that was the appointed date as stated in the order. Court ordered the transferor companies to deliver certified copies of the Court order to the ROC for registration within 30 days of the order date. After receiving the certified copies, the transferor companies would stand to be dissolved, and the ROC would consolidate all documents. The date designated for for delivering certified copies of the order to the ROC, is referred to in sub-clause (b) of clause 4 of the scheme as the “effective date”. On April 3, 1996, the Court order was indeed delivered to the ROC, leading to the dissolution of the transferor companies on that same day. The argument presented on behalf of the assessee suggests that until the effective date, the transferor companies retained their independent status. . If this argument is upheld, it would render the appointed date, mentioned in clause 4, meaningless and unnecessary. The High Court approved the scheme to be effective from April 1, 1995, rather than from the “effective date”.

An opposite stand was taken by Madras High Court in the case, Equitas Finance Limited v. C.I.T.[4] The facts of the case revealed that the scheme of amalgamation between the companies , had not mentioned any particular date on which the scheme might become effective. As a result of this, the companies could not specify clear and definite terms, in relation to the effective or appointed date. As per the provisions of the scheme, The reconstitution of the companies was only considered necessary before holding entity could receive “in-principal” approval to establish a Small Finance Bank. Madras High Court was positive while determining the issues related to the effective or appointed date, that was to be decided based on the facts and circumstances of each case. It was pointed out by the Regional Director that no damage was caused to the members or creditors of the group companies by the provisions provided in the scheme. Hence, the court held that there was no need to modify the provisions of the scheme.

Based on the different stands of the judicial authorities, there was a need to address the following concerns by MCA, regarding the interpretation of Section 232(6) of the Companies Act. Accordingly, a general circular no. 09/2019, dated August 21, 2019 was passed by MCA. This circular gave a better interpretation of MCA’s stance on “Appointed date” of scheme of amalgamation under Companies act. Under Section 232(6) of the Companies Act, “appointed date” can be determined as a specific date or any date connected to the happening of an event or fulfilment of certain prerequisites, as agreed upon by the parties and sanctioned by NCLT approval. If the “appointed date” is a specific date form the calendar then it must not be earlier than the date on which the scheme application is filed, extending beyond one year, unless the scheme itself justifies such advancement. And such schemes must not be against the interest of public. On the other hand, if the parties settle for the “appointed date” to be contingent to some conditions, then these conditions must be explicitly outlined in the scheme. Indian Accounting Standards-103 (Business Combinations) (“Ind-AS 103”), requires the acquirer to determine an “acquisition date”. Acquisition date is when it gains control of the acquiree. It has been specified by MCA that the “appointed date” will be the “acquisition date” for the purposes of Ind-AS 103.


The “appointed date” of the scheme denotes the transfer of operations of business from the transferor to the transferee company, the parties involved in the scheme must consider numerous aspects when deciding on this date. These issues include personnel transfers, accounting processes, and tax considerations etc. Furthermore, it is critical to understand that a single scheme of organisation cannot have multiple “appointed or effective dates” for distinct purposes. Companies that join into such schemes must carefully examine all the potential hazards and compliance requirements under various regulations before deciding on an appropriate implementation date.

Author: Tanya Khanijow, in case of any queries please contact/write back to us via email to or at  Khurana & Khurana, Advocates and IP Attorney.

[1] Marshall Sons & Co.(India) Ltd. Vs Income Tax Officer AIR 1997 SUPREME COURT 1763

[2] Raghubar Dayal v. The Bank of Upper India Ltd. AIR. 1919 P.C. 9

[3] Deputy Commissioner Of Income Tax vs Aimil Limited 2008 25 SOT 49

[4] Equitas Finance Limited v. C.I.T. C.P. Nos. 119 to 121 of 2016

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